Heinz's healthy food focus leads to fat profits

By Charlotte Eyre and Ahmed ElAmin

- Last updated on GMT

Related tags: Heinz, Organic growth, Revenue, H. j. heinz company

Heinz's sales grew by 9 per cent in the quarter ended 2
August, the company said today in a trading statement.

Heinz's sales grew by 9 per cent in the quarter ended 2 August, the company said in a trading statement released today. In the statement, released ahead of the annual shareholders' meeting today in Pittsburg, Heinz anticipated organic sales growth of about five per cent across its global businesses in its fiscal first quarter. The company racked up double-digit organic sales growth for its ketchup, beans and soup brands, said company president and chief executive officer, William Johnson. The accelerated revenue growth reflects the launch of new, innovative and healthy products, he said, adding that Heinz also increased its marketing budget by 25 per cent during the quarter. "The company's anticipated 14 per cent operating income growth reflects both strong sales and productivity improvements,"​ he stated. "Heinz's broad international portfolio performed extremely well and was further enhanced by foreign exchange in the quarter which helped offset higher commodity costs."​ The company plans to grow by increasing marketing spend by an additional $100m over two years, he said. The company will launch "robust new product pipelines across our developed markets",he added.​ The main area driving growth is the Pure Food Company division, whose products are aimed at the health and wellness trend. "From organic Classico pasta sauces to our expanding range of reduced calorie meals, soups and desserts under the Weight Watchers from Heinz and Weight Watchers Smart Ones brands, we provide consumers with multiple options to suit their lifestyles",​ Johnson said. Heinz has also profited from "the exponential increase in the middle-class populations in emerging markets",​ he added. Brands such as Long Fong in China, ABC in Indonesia and Complan in India contributed 10 per cent to Heinz overall sales, and around 30 per cent to sales growth. At the shareholder's meeting, the company also re-elected activist investor Nelson Peltz to the board, according to Forbes. Peltz eventually won seats on the 12-member board after a months-long campaign to pressure Heinz into improving shareholder returns by cutting costs and boosting marketing, the magazine said. In the financial year ended 2 May Heinz posted a 4.1 per cent growth in sales, benefiting from improving fortunes within Europe and its regional operations in markets like Asia and Latin America. The company attributed the performance to a 1.7 per cent drop in expenses to $1.94bn, and a greater consumer focus. Operating margins were up by about three percentage points to 16 per cent for the year, driven by the group's plans to offset commodity and marketing costs. Heinz is scheduled to release its quarterly earnings report 24 August.

Related topics: Markets, Health

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